Com­pa­nies in Tian­jin sus­pend oper­a­tions

The Pak Banker - - COMPANIES/BOSS -

For­eign com­pa­nies have sus­pended oper­a­tions around the Tian­jin port as of­fi­cials scram­ble to con­tain the toxic fall­out of last week's deadly chem­i­cal ex­plo­sions, which dealt a blow to north­ern China's emerg­ing eco­nomic hub.

Toy­ota, which has oper­a­tions near the blast evac­u­a­tion zone, said it had sus­pended three pro­duc­tion lines, which ac­count for over half of its China ca­pac­ity, through Wed­nes­day. Thou­sands of Volk­swa­gen, Toy­ota, Hyundai and Re­nault cars, most of them pricey im­ports, parked on lots near the blast were dec­i­mated.

The oper­a­tions of Pana­sonic, lo­gis­tics com­pany Singa­mas Con­tainer Hold­ings and, re­port­edly, Deere & Co. have also been dis­rupted. The list of name-brand com­pa­nies im­pacted by the blast is a tes­ta­ment to Tian­jin's rise, but reg­u­la­tory and safety lapses at the haz­ardous goods ware­houses that ex­ploded draw at­ten­tion to the some­times shaky in­fra­struc­ture China has laid down as it pur­sues ul­tra­fast growth.

The port lies at the heart of one of China's new free trade zones, de­signed to draw for­eign in­vest­ment and cre­ate an eco­nomic hub for China's north­east that could one day ri­val the Pearl and Yangtze river deltas. The broader Bin­hai New Area has long been on the radar of Bei­jing's tech­nocrats, who hope to in­te­grate Bei­jing, Tian­jin and He­bei into a sin­gle, thrum­ming eco­nomic pow­er­house.

"This wasn't just an in­ci­dent in some third-rate city. It was right at the heart of ev­ery­thing," said Chet Schel­tema, a re­gional man­ager at in­ter­na­tional busi­ness con­sul­tancy Dezan Shira & As­so­ci­ates, who has lived and worked in Tian­jin. He said the ex­plo­sions called at­ten­tion to de­fi­cien­cies in China's soft in­fra­struc­ture, things like safety stan­dards and emer­gency pre­pared­ness, which are usu­ally over­shad­owed by China's shiny sky­scrapers and im­pres­sive roads.

"There's still a lot to be done that's not im­me­di­ately ob­vi­ous," he said. "When you're try­ing to re­cruit your CEO and his or her fam­ily from the U.S. and they see these kinds of things on TV, or their fam­ily and rel­a­tives see this, they start to talk and think, should I re­ally be go­ing to China? Are they re­ally the sta­teof-the-art econ­omy we thought they were?"

Air­bus built its first assem­bly line out­side of Europe in Tian­jin, which turns out four A320 air­craft per month. Spokesman Jac­ques Rocca said its fa­cil­i­ties, 40 kilo­me­ters (25 miles) from the port, were un­af­fected.

"We are eval­u­at­ing what could be the im­pact in the com­ing weeks, but it will de­pend on the ca­pa­bil­ity of the port of Tian­jin to re­cover its ac­tiv­ity," he said. The Tian­jin Mar­itime Bureau said Mon­day that 85 ships had been de­layed or can­celed, but that port traf­fic is now nor­mal.

Gen­scape, which mon­i­tors com­mod­ity and energy mar­kets, has doc­u­mented nor­mal oil and petro­chem­i­cal taker traf­fic at the port. Fish­ing boat traf­fic fell by half the day af­ter the blast, but has now par­tially re­bounded, said Amir Bor­naee, an oil an­a­lyst at Gen­scape.

Pana­sonic, which has a prod­uct de­vel­op­ment cen­ter 5 kilo­me­ters (3.1 miles) from the blast site, kept its of­fices closed Mon­day, out of con­cern for em­ployee safety. A spokes­woman said ex­ec­u­tives were still eval­u­at­ing whether to open the of­fice Tues­day.

Hong Kong-listed lo­gis­tics com­pany Singa­mas Con­tainer Hold­ings, which has two de­pots close to the blast, told the stock ex­change Mon­day that it had sus­pended oper­a­tions at the site and lost con­tact with one em­ployee. The fil­ing said the com­pany did not an­tic­i­pate a ma­te­rial im­pact on busi­ness.

U.S. farm equip­ment maker Deere & Co. also re­port­edly sus­pended its Tian­jin oper­a­tions. Em­ploy­ees from the com­pany's Bei­jing of­fice re­fused to com­ment Mon­day.

Au­tomak­ers have been hit hard be­cause Tian­jin is one of China's ma­jor ports for car im­ports. Volk­swa­gen said it had lost around 2,700 ve­hi­cles. Re­nault said 1,500 Koleos SUVs were dam­aged.

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